Billionaire Chicagoan Gigi Pritzker to form movie studio

March 10, 2014|By Melissa Harris | Tribune reporter

Gigi Pritzker in her north side office in 2010. ((Alex Garcia/Chicago Tribune))

Billionaire Chicagoan Gigi Pritzker doubled-down on the movie industry Monday, announcing that she will form a new movie studio with fellow producer Robert Simonds, private-equity firm TPG Capital and China’s Hony Capital that would release as many as 10 films a year.

The studio, the name of which was not announced, aims to set itself apart from its bigger rivals by filling in territory they have abandoned, self-distributing the films and tapping Chinese investors, presumably with the aim of tapping a Chinese audience as well.

Pritzker, who declined an interview through a spokesman, will serve on the company’s board. The amount of her investment, which will come in the form of both equity and debt, was not disclosed. Simonds will lead the effort.

“I am confident in Bob's vision for this company and the partnership he has assembled,” Pritzker said in a news release. “I look forward to seeing it thrive. As both a filmmaker and an investor, I look forward to finding strategic opportunities to work with him on upcoming projects.”

Pritzker is a member of one of Chicago’s wealthiest families, which founded the Hyatt hotel chain. After a dispute over money and control, the family broke up its empire, selling off holdings and dividing its stake in Hyatt.

That resulted in family members sitting on enormous piles of cash and the freedom to spend without consulting relatives. Pritzker has long been an investor in theater and film, having founded her own production company, Los Angeles-based OddLot Entertainment, in 2001. She is best known locally for “Million Dollar Quartet,” which became the longest-running musical in Chicago history in May and was nominated for a Tony Award for Best Musical in 2010.

OddLot is not involved in this new venture. It recently began a multi-year, multipicture co-financing and distribution deal with Lionsgate. Under that agreement, it is slated to release Ivan Reitman’s "Draft Day," starring Kevin Costner, April 11. Independent of the Lionsgate deal, it is producing Jon Stewart’s directorial debut, Rosewater.

Its past production credits include "Drive" with Ryan Gosling; "Rabbit Hole," for which Nicole Kidman was nominated for an Oscar; and "The Way, Way Back" starring Steve Carell.

Its first major release, "Ender’s Game," released in November, was a financial failure, grossing $112 million worldwide on a $110 million budget. Budget figures omit the sizeable amount spent on marketing a film.

By comparison, this new company will seek to release films with approximately $40 million budgets featuring big-name stars, filling a territory most studios have abandoned.

Adopting the business model of larger established studios, it will be a distributor of its films, as well, having inked distribution agreements directly with four of the biggest movie theater chains in America: AMC Theatres, Regal Entertainment Group, Cinemark and Carmike. According to the New York Times, those agreements guarantee nationwide screen time for up to 10 films a year.

Another key part of its strategy is China’s Hony, which has $7 billion under management. (Forbes estimates Pritzker’s net worth alone is $2.3 billion.) More importantly, Hony has SMG (Shanghai Media Group) Pictures in its investment portfolio. According to The Times, SMG has forged deals with other American studios to develop movies for the Chinese market.

“We wanted this to be blue-chip, strategic money, and not just some guy writing a big check,” Mr. Simonds told The Times.

Still, even the best business strategy will not insulate anyone from flops. And the risks stand right up there with venture capital, in which conventional wisdom goes that only one out of every 10 start-ups will succeed. Similarly, among the most difficult creative achievements is crafting a piece of entertainment that a lot of people want to watch.